- Above normal temperatures and near to slightly above normal rains will continue to benefit winter and spring grain crops in Europe and the Black Sea for the next two weeks. The maturity of the EU and Russian winter wheat crop is well ahead of normal, but there is no evidence of any threatening cold temps that would cause concern. European and Russian wheat production is off to a solid start.
- Today has seen Chicago grains fall sharply whilst soybeans an meal have pushed to fresh 2016 highs and we have to say that we currently see no good fundamental reason for the recent soy complex rally. It feels as if funds are taking a long side stab at the soybean market without due regard for the global oversupply position and negative Chinese crush margin situation. We had expected losses in grains as rain across the Plains were well forecast and Midwest corn seeding is likely to advance rapidly in the coming week. We struggle to see the soybean rally lasting as US soybean meal basis prices ease and the abundant S American supply pressures the market.
- It has been suggested that funds are pushing fresh money into the soybean complex on the back of chart technicals and seasonal historic considerations, which tend to see the market turn higher at this time of year. Doubtless there will be some spillover support from political issues in Brazil, the Real rallied to almost 3.51:1 vs. US$. There is anticipation of further impeachment proceedings against President Dilma and if a two thirds majority vote would allow the senate to ask Dilma to step down pending investigation. The Real rally is based upon the vice president taking over and providing an improved economic outlook. Will it, or won’t it happen? A big question with no certain outcome at this time, but one which is pushing bearish fundamentals to one side – for now.
- We see little longer term bullish input at present.